Sunday 26 March 2017

Top diplomat bemused by 'turned the corner' speech

Shane Phelan, Investigative Correspondent

AMERICA'S top diplomat in Ireland was left bemused by Brian Lenihan's infamous "we have turned a corner" budget speech, a leaked US embassy cable reveals.







Ambassador Dan Rooney said it was "a mystery" why the then Finance Minister had made such an upbeat pronouncement.

In a 'confidential' dispatch to the office of US Secretary of State Hillary Clinton, the diplomat wondered if Mr Lenihan had got carried away with himself or if his speechwriter had made a terrible mistake.

During the December 2009 speech, which delivered what was widely considered one of the most draconian budgets in decades, Mr Lenihan assured the nation "the worst is over" and added it was "going to be the last of the very difficult budgets".

"Our plan is working. We have turned a corner," he claimed.

SLIP-UP

The comments were made just 11 months before Ireland would be forced to sign up to an ¿85bn EU/IMF bailout plan.

Although Mr Rooney didn't foresee events deteriorating to the extent they did, he was clearly taken aback by Mr Lenihan's comments.

"It is hard to find someone who agrees with him and it is likely that next year's budget will be even more difficult," Mr Rooney wrote.

"Whether it was bad speechwriting, a slip-up, an attempt to kick the can down the road, or something else, the opposition will surely reference these comments next year in the lead up to [the next] budget."

That year's Budget saw the implementation of ¿4bn in spending cuts. Public sector workers had their pay cut by between 5pc and 15pc, while child benefit and social welfare were also cut.

Mr Rooney briefed Ms Clinton's office that the government had "softened up" the Irish public ahead of the cuts by commissioning the An Bord Snip Nua and Commission on Taxation reports.

He said: "The government did a good job of signalling its intentions early on and allowing the public to come to terms with the reality over time."

However, he added that most commentators the embassy had spoken to found Mr Lenihan's comments hard to swallow and expected even more difficult budgets in the coming years.

The cable said the embassy took advice on the budget from economists Constantin Gurdgiev and Jim Power.

Mr Gurdgiev is said to have advised the embassy that Mr Lenihan's upbeat statements "fly in the face of reality", while Mr Power was quoted as describing growth projections as "wildly optimistic".

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